THE Philippine government’s landmark issuance of its first-ever green Samurai bonds showed strong investor confidence in the country’s commitment to climate change initiatives, Finance Secretary Carlos G. Dominguez III said.
Last Monday, the Philippines borrowed 70.1 billion yen (around P29.1 billion or $600 million) through its maiden issuance of four-tranche green Samurai bonds, marking its successful return to the Japanese market.
The pricing for its 5-year, 7-year, 10-year and 20-year Sustainability Samurai Bonds came just less than a month after it borrowed $1 billion through its maiden green dollar bond issuance with a 25-year tenor. So far this year, the government raised around $1.6 billion from its green bond issuances so far to the offshore debt market.
“Following a successful US Dollar transaction, the Republic has once again exhibited investor appetite for Philippine financial instruments despite the current market volatilities with its successful issuance of the sovereign’s first-ever ESG [Environmental, Social and Governance] Samurai bonds. This is testament to the international appreciation of and confidence in, the government’s strong commitment to climate change mitigation and adaptation initiatives and to deepening its domestic sustainable finance market,” Dominguez was quoted in a statement as saying.
Separately, the finance chief also told reporters the back-to-back successful green bond issuances provided another financing platform as well as captured a new investor base that will help the country in pursuing its climate change initiatives.
Asked if this will be the new normal for the Philippine government to borrow green bonds instead of the usual ordinary debt instruments, Dominguez said: “However, our financing strategy will remain opportunistic to tap cost-efficient structures to meet the requirements of our priority endeavors, particularly climate-related projects.”
As its Nationally Determined Contribution (NDC) to the Paris Agreement, the Philippines has committed to a projected greenhouse gas emission reduction and avoidance of 75 percent from 2020 to 2030 for the sectors of agriculture, wastes, industry, transport and energy despite being among the countries with the smallest carbon footprints. Of the 75 percent, 72.29 percent is “conditional” or contingent upon the support of climate finance, technologies and capacity development, which shall be provided by developed countries, as prescribed by the Paris Agreement, while the remaining 2.71 percent is “unconditional” or shall be implemented mainly through domestic resources.
Finance Undersecretary Mark Dennis YC Joven, who heads the Department of Finance’s International Finance Group, also pointed out that the transaction also marks the government’s first long-tenor Samurai offering.
In a bid to utilize demand for longer tenors, the government issued its first 20-year note in the Samurai market.
For her part, National Treasurer Rosalia V. De Leon said the deal also comes at a time of rising geopolitical tensions and market volatility.
“Amid market volatility and rising geopolitical tensions, this landmark Samurai transaction has demonstrated the Republic’s ability to price tighter than current secondary levels and extend the maturity to the long-end of the curve. The upsized transaction supported by new investors from Japanese regional banks and life insurance companies highlights the Republic’s strong credit profile in the global capital markets,” De Leon said.
SMBC Nikko Securities Inc. and Mitsubishi UFJ Morgan Stanley Securities Co., Ltd acted as Lead Managers for this deal.
In March last year, the Philippine government raised ¥55 billion ($500 million or about P24.2 billion) in its sale of 3-year zero-coupon Samurai bonds.